This morning’s theme is changing fortunes. Effective leaders are always anticipating new circumstances, or responding to them, or trying to change those circumstances themselves. In today’s news, we see leaders doing all those things.
-General Electric chief Jeff Immelt is moving GE headquarters to Boston after 42 years in Fairfield, Connecticut. Why? Partly because he has felt disrespected by the state government, which has raised corporate taxes and otherwise been inhospitable to business, he has said. But the bigger reason is that the world has changed. Luxurious, verdant suburban campuses are no longer what the best employees want. And believe me, GE HQ is beautiful – unlikely proof that it was actually possible to create something tasteful in the mid-1970s. But who cares anymore? The best people, especially the best young people, want an energetic, stimulating urban environment, and such places are more available than they have been in decades. While GE is undoubtedly getting a great package of incentives in Boston, a major attraction must also be that it’s America’s education capital, practically throbbing with new ideas. The leaders who most have to adapt to changing circumstances now are those in government and commercial real estate.
-What’s going on with Bernie Sanders? A no-hope candidate whom political pros have considered symbolic rather than realistic is suddenly ahead of Hillary Clinton, the supposedly prohibitive favorite, in Iowa and New Hampshire. Clinton’s world has changed, and her challenge is to figure out the best response. It won’t be easy. Adopting Sanders’ far-left policy positions – he’s a self-described socialist – could damage her in the general election, assuming she’s the nominee. Much of his popularity comes from his obvious passion for the issues, and while Clinton may be equally passionate about them, to many voters she does not radiate authenticity; she can’t change who she is. It’s hard to see Sanders ever being elected. He’d be 75 at inauguration, and the country probably isn’t ready to elect a socialist. But if Clinton loses Iowa and New Hampshire, then what? She must do some clever adapting now or she’ll have to do a lot more radical adapting in a month.
-Chipotle’s comeback struggle took a turn for the better yesterday. The stock jumped 6% after co-CEO Steve Ells and other executives told analysts about their planned response to the food contamination scandals that have crushed the stock over the past six months. At an investor conference they made an impressive presentation describing, among other moves, a massive marketing effort scheduled for next month. They made the case that the chain can recover fully, and they may be right. But it will be a long road back, and heaven help them if there’s another problem.
The world never stops changing, and good leaders never stop adapting. It’s really hard. But whoever said leading was easy?
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What We’re Reading Today
Ted Cruz’s mystery loan
In 2012, while Cruz campaigned to become senator in Texas, he said he funded his run by liquidating his savings. However, he also received an undisclosed loan from Goldman Sachs and Citibank, totaling $750,000. Cruz’s wife, Heidi, works for Goldman Sachs. The loans reached $1 million by the end of 2012 and were not included in reports filed to the Federal Election Commission. The Cruz campaign says failure to report the Goldman loan was an error. NYT
General Electric moves to Boston
CEO Jeff Immelt decision was partly based on taxes becoming onerous in Fairfield, Conn., the company’s longtime home. GE chose Boston, Mass., in part due to the plethora of tech talent generated by several nearby universities. The state and city also offered GE up to $145 million in incentives and tax exemptions. GE will sell its Fairfield and 30 Rockefeller Plaza locations to offset the cost of the move. USA Today
Chipotle plans E. coli response
Next month, Steve Ells‘ company will begin a large marketing campaign to convince customers to return to the chain following an E. coli outbreak and other health complaints. The ads will roll out in February, which is typically a slow period for the company. It’s to boost sales after the health issues, which Ells says could continue to impact revenues throughout 2016. Fortune
Valeant CEO’s return uncertain
Interim CEO Howard Schiller said that J. Michael Pearson‘s health battle continues and the timing of his return to the company isn’t yet known. Valeant announced on Dec. 25 that Pearson was admitted to a hospital for severe pneumonia. Valeant faces questions about its drug pricing and accounting practices. Bloomberg
Building a Better Leader
The lessons to learn from bad managers
Even being too nice can have its downsides, like not challenging employees who underperform. Switch & Shift
The Daily Telegraph had begun to monitor…
…when employees were at their desks. Fortune
GoPro to cut 7% of its workforce
The action camera company’s shares fell 23% following the news. CEO Nick Woodman briefly halted trading of the stock because of the surprise announcement, which included a 47% expected decline in fourth quarter revenue compared to last year. The company has struggled to maintain growth in the face of increased competition and market saturation. Fortune
It’s expensive to be ‘too big to fail’
MetLife is breaking off its U.S. retail business because it thinks it’s too expensive to be considered “systematically important” by U.S. regulators. General Electric’s Jeff Immelt came to the same conclusion in April, when it began reducing GE Capital’s size. While regulators never passed a resolution limiting the size of companies, it has set a series of capital requirements that’s difficult for large businesses to maintain. WSJ
Al Jazeera America will shut down
The media outlet has struggled to connect with American viewers. It was also hampered by internal strife, including claims of discrimination. Making matters worse, former CEO Ehab Al Shihabi was replaced in May by Al Anstey after complaints surfaced over his management style. Al Jazeera America will officially sign off in April. Al Jazeera
Up or Out
SurveyMonkey has tapped chairman Zander Lurie as CEO. Current CEO Bill Veghte, who took the reins less than six months ago following the death of Dave Goldberg, will remain a board member. Fortune
Yahoo’s VP of corporate development Steve Fan has left the company to become director of strategic initiatives at Tencent. Global head of public policy and deputy general counsel Tekedra Mawakana is also leaving to become eBay’s VP of government relations. Re/Code
Fortune Reads and Videos
Uber’s Southeast Asian rival GrabTaxi…
…will open its first U.S. office in Seattle. But it’s not planning to offer its service in the U.S. Fortune
38% of U.S. households use Amazon Prime
The success of the subscription service could cause problems for Target and Walmart. Fortune
Putin says Russia has developed an Ebola vaccine
Experts, however, are skeptical. Fortune
“We face these difficult times now and need to reassure our customers that this can’t happen again and that we’re going to reduce the risk of this kind of outbreak from occurring again to near zero.” – Chipotle co-CEO Steve Ells discussing the fast-food chain’s planned response following the E. Coli outbreak. Fortune
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|Produced by Ryan Derousseau|